Tuesday, September 15, 2015

Texas' Petty "Occupational Licensing" Larceny....


"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Proverbs 11:1

"Occupational Licensing" is one of the great swindles the Texas Legislature has imposed on it's citizenry.  It protects established players, while trampling on consumers and innovators.  TPPF released a paper this morning outlining the damage.

The final conclusion:
The evidence, however, paints a different picture; licensing laws act more as a form of protectionism for those in licensed professions while blocking access to jobs, stifling job creation, and hindering technological development and access to information. Similarly, increasing technology and market advances are making governmental regulation of occupations increasingly obsolete. If Texas wants to further expand the economy, it should remove this barrier to employment and allow market-based solutions to market problems.
This isn't a new problem:
The debate over occupational regulation has raged since the founding of modern day economics. In Wealth of Nations, author Adam Smith lamented that tradesmen seek to establish regulations limiting the number of apprentices per master to “restrain the competition to a much smaller number than might otherwise be disposed to enter into the trade (Smith, 98).” Milton Freidman further speculated that governments and professional organizations issuing licenses were not unbiased gatekeepers and that these licenses served to create monopoly rents by creating more barriers to employment (Friedman, 118).
The similarity with labor unions:
Unions and occupational licensing have a similar effect on wages by limiting the supply of workers, so when the economy began its shift, groups of professionals increasingly turned from unions to this new method of increasing wages and providing job protection.
Some of the (almost) uniquely Texan absurdities:
Texas is, in fact, one of only five states to license people to shampoo a customer’s hair. That the vast majority of states can survive without this license makes it even more obvious that it does not serve to protect the consumer, and that there is no threat to society posed by unlicensed shampooers.
And, of course, licenses don't stop dishonest behavior:
Licensing alone does not necessarily prevent unethical practices from occurring. Dishonest people can still engage in unethical practices regardless of the threat of losing their license. In fact, because of the centralized, bureaucratic nature of governmental occupational licensing, the threat of losing a license may be small or even nonexistent, providing little incentive for a licensee to behave ethically, promote public safety, or satisfy consumers (Summers, 4). On the other hand, competition in the market will often correct these problems by simply forcing unwanted businesses to shut down without the added threat licensing. An effective tort system where consumers can recover damages to their person or property is also better suited to correcting these problems than the power of government intervention. In this sense, market forces—including private certification and licensing—may better serve consumers and enforce principled business practices.
So who does licensing help?!?
If these licenses do not serve to protect consumers, the question must be asked: who does benefit from them? The answer can again be found when evaluating the differences between states that license certain occupations versus states that do not. Economists Morris Kleiner and Alan Krueger (S179) found that requiring a license is associated with a 15 percent increase in hourly wages for those professions. Supporters argue that this wage increase is a result of increased quality of goods and services provided. However, by restricting the labor supply, licenses can stifle competition and actually reduce quality since businesses are no longer under as much pressure to excel. It is far more likely that this wage increase is indicative of a closed shop model perpetuated by licensing.
But don't you DARE provoke the wrath of Big Business/Big Government collusion:
The protectionist nature of licensing restrictions can be seen in the fact that section 165.151 of the Occupations Code makes it a Class A misdemeanor to violate the rule of a professional licensing board covered under the Occupations Code (Levin, 1). This is punishable by up to one year in jail.
And who is hurt worst?!?
Occupational licensing benefits those in licensed fields by increasing their wages to the detriment of consumers who are forced to pay artificially higher costs for goods and services. However, consumers are not the only ones who bear the burden caused by occupational licensing; the weight also falls heavily on the backs of those who wish to enter licensed fields but cannot afford to invest the time and money required by licensing. This is most often the case for those on the lower rungs of the economic latter (Carpenter et al). Licensing laws deny them access to jobs that could help lift them up to higher levels of economic prosperity, and represent an inequity of treatment in the law that favors those in the middle class at the expense of the poor.
Read the whole thing here.

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